SEC v. James Ellis, Case No. 12-cv-62211 (S.D. Florida.). On November 9, 2012, the SEC announced charges against James Ellis. The SEC alleges that Ellis was involved in a Ponzi scheme with George Elia. Ellis found investors and introduced them to Elia. Ellis claimed he was receiving strong returns on his own multi-million dollar investments with Elia. In reality, Ellis had not made an investment. Rather, Elia paid Ellis $2 million for finding new investors in the Ponzi scheme. After the introduction, Elia would tell investors that he had a successful track record that generated returns of up to 26 percent. Ellis told investors that he received comparable returns on his investment, when in fact, he did not receive such returns.

The SEC has charged Ellis with violating Section 17(a)(1), (2) and (3) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The SEC also alleges that Ellis violated the registration provisions of Sections 5(a) and (c) of the Securities Act. The Commission is seeking permanent injunctions against Ellis for violating the above provisions of the securities laws, disgorgement of ill-gotten gains plus pre-judgment interest, and civil penalties. Separately, the United States Attorney’s Office for the Southern District of Florida announced criminal charges against Ellis for his conduct in the scheme.